IRS Apologizes for Scrutiny of Conservative Groups

The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax exempt status. John McKinnon reports on the News Hub.

WASHINGTON—The Internal Revenue Service apologized Friday for what it said were mistakes in targeting tea-party and other conservative groups for extra scrutiny during the 2012 election campaign, but said its actions weren't politically motivated.

"We made some mistakes," Lois Lerner, head of the IRS tax-exempt organizations division, told reporters. "Some people didn't use good judgment....For that we're apologetic."

The IRS added in a statement that the errors "were in no way due to any political or partisan rationale." Agency officials said the improper actions were taken by career civil servants, not by political appointees.

The announcement didn't mollify many in the tea-party movement or Republicans on Capitol Hill. The IRS last year denied that any political groups were targeted.

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"Today's acknowledgment by the
Obama
administration that the IRS did in fact target conservative groups in the heat of last year's national election is not enough," said Senate Republican Leader Mitch McConnell of Kentucky. "Today, I call on the White House to conduct a transparent, government-wide review aimed at assuring the American people that these thuggish practices are not underway at the IRS or elsewhere in the administration against anyone, regardless of their political views."

Rep. Dave Camp (R., Mich.), chairman of the tax-writing House Ways and Means Committee, said the panel will investigate the matter, and that a hearing will be held soon.

Jenny Beth Martin, a co-founder of Tea Party Patriots, an umbrella organization for some 3,000 local groups, said those responsible should be dismissed or resign. "Either it's a systemwide abuse of power and they lied and there is a coverup going on, or their internal system is so broken that low-level employees have the ability to act this way with little or no supervision," she said.

ENLARGE

The Internal Revenue Service building in Washington.
AP

At the White House, press secretary Jay Carney said that what the administration knows of the matter is "of concern" and "inappropriate." He noted the IRS is an independent agency, but said President Barack Obama would expect actions to be taken to clear up what happened.

The IRS comments came as the Treasury Department inspector general for tax administration is nearing completion of a report on the matter; a spokesman for the inspector general said it is expected to be issued next week. At the same time, the IRS is sending questionnaires to some groups that self-declare their tax-exempt status, seeking more information on their political activity, and it is reviewing tax returns of some exempt groups to make sure they are complying with rules imposing a tax on some of their political activities, tax experts say.

A congressional aide familiar with the findings of the inspector general's report said it concludes that tea-party groups were delayed in the application process, and were asked unnecessary questions.

The controversy arose in early 2012, when reports began to surface that newly formed tea-party and other conservative groups that had applied for tax-exempt status were receiving letters from the IRS asking for disclosure of their donors and other information that typically isn't requested of groups making such applications. IRS officials, in congressional testimony soon after that, denied targeting of tea-party groups had occurred.

Chris Littleton, a co-founder of the Ohio Liberty Council, said his group was asked for so much information from the IRS when they applied for status that its leadership gave serious thought to throwing in the towel. "This is a systemic failure—that's what this comes down to," he said.

The IRS review of the applications occurred after officials noticed that applications for 501(c)(4) status doubled between 2010 and 2012. Such groups are known as "social welfare" organizations and can include homeowner associations and volunteer fire departments. But such entities increasingly have been used for public issue advocacy, as well as political campaigns. IRS rules allow such activities, as long as promoting social welfare remains a group's primary focus.

The rules, however, allow wide definitions, such as promoting legal rights, for certain groups. Both the AARP and the National Rifle Association are 501(c)(4) organizations.

Amid the large uptick in applications—from about 1,500 in 2010 to around 3,400 in 2012—the IRS said it decided to centralize applications that needed further review at its Cincinnati office, which oversees most tax-exempt organizations.

"While centralizing cases for consistency made sense, the way we initially centralized them did not," the IRS statement said.

Ms. Lerner said that IRS employees in the Cincinnati office in charge of reviewing tax-exempt organizations selected groups for extra screening based in part on their names—focusing, for example, on groups with "tea party" or "patriot" in their names. About 300 applications of all sorts were selected, including 75 from tea-party or patriot groups, Ms. Lerner said. She declined to say whether any IRS employees have been disciplined.

IRS officials couldn't immediately say if other groups picked had particular political leanings. In many cases, their applications were simply incomplete or inconsistent, officials said.

About 130 of the 300 or so affected applications have been approved. Another 25 or so have been withdrawn. The rest remain pending, Ms. Lerner said.

Tea-party groups complained often to lawmakers last year about excessive IRS scrutiny in processing their 501(c)(4) applications. Groups with that status aren't required to disclose the identities of their donors.

Sen. Orrin Hatch (R., Utah), the top Republican on the Finance Committee, called Friday for "ironclad guarantees from the IRS that it will adopt significant protocols" to prevent such behavior in the future.

IRS officials "fixed the situation last year and have made significant progress in moving the centralized cases through our system," the agency said.

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